- FTSE 100 down 81 points to 9,354
- Gold continues its bull run
- Barclays, StanChart, NatWest decline sharply
- Wall Street futures trade lower
4.54pm: In the red
The FSTE 100 finished the week on a sour note, down 81 points at 9,354.
Even gold wasn’t spared from Friday’s sell-off, down about 1.1% at $4,257 per ounce.
“It turns out gold goes down as well as up. The price’s apparently unstoppable march has finally hit a speed bump,” IG chief market analyst Chris Beauchamp said.
“Notably we haven’t seen two consecutive down days for gold since August, so investors will have to wait to see if the selling continues on Monday, indicating a potential short-term top in this glittering rally.”
12.48pm: Losses pared
Blue-chip stocks went from triple-digit losses to a mere double-digit deficit with the FTSE 100 down JUST 98 points. Earlier in the session, it was off by more than 150. So, perhaps the worst is over.
Ahead of the bell, Wall Street looks likely to kick off in the red, although the projected shortfall looks modest compared with earlier in the session and on Thursday after hours when a regional banking scare rattled sentiment.
Elsewhere, the 9% fall in the Bitcoin price over the past week has pulled the rug from under London’s nascent crypto-treasury sector. So much for BTC being the new gold.
While the precious metal surged to a new record, Bitcoin was hit by overextended long positions, according to analysts.
“On the chart, it looks worse. In context, it is a classic crypto reset where hot air escapes, leverage gets punished and the market relearns position sizing in real time,” noted News Defused in its analysis.
The hammer fell on The Smarter Web Company, which dropped 38%. It recently bought about £9 million worth of the cryptocurrency for over $120,000 a pop and is sitting on a treasury of £220 million, according to filings, though this was the value of the holding on Monday.
11.20am: Gold continues its charge
The whiff of panic on the streets of the City of London appears to have only enhanced appetite for precious metals, haven investments in times of turmoil.
The spot price of gold has surged past $4,300, extending its relentless run as investors pile into hard assets.
Bitcoin, once touted as “digital gold”, has fared rather differently, tumbling 15% from its recent peak as the latest risk-off wave forces heavy liquidations.
In politics, Donald Trump is set to meet Vladimir Putin again in the coming weeks, hoping to chalk up another peace deal as part of his foreign policy revival tour.
10.20am: ICG takes it on the chin
While everyone has been watching the tech sector for signs of a bubble, AJ Bell's Russ Mould notes that it’s the banking sector that’s the root cause of a minor market sell-off today.
“Pockets of the US banking sector, including regional banks, have given the market cause for concern," commented Mould.
"Investors have started to question why there have been a plethora of issues in a short space of time and whether this points to poor risk management and loose lending standards. This includes Zions flagging an unexpected loss on two loans and Western Alliance alleging a borrower had committed fraud.`"
The real victim has been ICG PLC (formerly Intermediate Capital Group), plummeting almost 7% due to its exposure to private credit—the sector's Achilles heel.
"Investors have been spooked and moved to trim positions in the sector, possibly opting to have lower exposure in case a crisis is brewing," Mould explained.
9.55am: Footsie extends losses as banks sink
The FTSE 100 has extended its losses as Friday's session progresses, weighed down by the big banks on concerns about the "credit issues bubbling up in the US".
Barclays has shed 5%, Standard Chartered if 4.7% weaker and NatWest is 3.3% weaker.
Saxo Markets Neil Wilson explained that financials make up about a quarter of the FTSE 100 by weight, contributing to the index's 146 points (1.6%) decline to 9,289.83.
"That would be its biggest daily decline since April," Wilson added. "Add worries about trade wars (last week's edition) and the ever-growing bubble risk from AI, and you have a pretty nasty little cocktail of excuses to end the week in risk-off mode. We've been so used to up days, the down days feel all the tougher and stranger. US futures are indicating a sharply lower open."
Wilson noted that bank stocks across Europe are down 2.8%.
In Frankfurt, the DAX is down 2.1%, while the Paris CAC 40 has dropped 0.8%.
US futures currently point to declines of 0.9% to 1.4% for the Dow Jones, the S&P 500 and the Nasdaq when trading gets underway this afternoon.
8.55am: Storm clouds gathering?
There are increasing signs of storm clouds gathering over markets, with little relief from the building wall of worry, according to interactive investor's Richard Hunter.
"Already grappling with stretched stock valuations in the AI space, an unresolved government shutdown and a deteriorating relationship between Beijing and Washington, investors were exposed to a new source of concern in the form of lending practices and bad loans for US regional banks," Hunter said in his morning note.
While the credit losses disclosed by two US regional banks appear manageable on paper, Hunter said they've spooked investors who remember Silicon Valley Bank's collapse in March 2023. With more banks still to report, he said everyone's jumpy.
Meanwhile, economists are flying blind thanks to data gaps from the government shutdown. From what's trickling in, the Fed seems less worried about inflation and more focused on the job market.
"It remains to be seen whether the current consensus of two further interest rate cuts this year, including a potential bumper cut of 0.5%, proves to be hope rather than expectation," Hunter added.
The Footsie is now down 145 points, just over 1.5%, at 9,291.37.
8.15am: Footsie slumps at the open
The FTSE 100 opened sharply lower as troubles at regional US banks cast a pall over investor sentiment on both sides of the Atlantic.
London's blue-chip index shed 1.3% in the first couple of minutes of trade and was 136 points, or almost 1.5% lower, at 9,299.73 at the time of writing.
Unsurprisingly, banks were among the biggest decliners, with Barclays PLC (LSE:BARC) and Standard Chartered PLC (LSE:STAN) both shedding over 4% while NatWest Group PLC (LSE:NWG) fell more than 3% in early dealings.
On the upside, Pearson PLC (LSE:PSON) jumped 3.8% after a third-quarter trading update showed accelerating sales growth, with the media company pointing to an even better fourth quarter.
Smiths Group (LSE:SMIN) gained 1.7% after agreeing to sell Smiths Interconnect to Molex Electronic Technologies for an enterprise value of £1.3 billion.
7.30am: What's up with US banks?
US regional banking stocks got hammered after Zions and Western Alliance came clean about their loan disasters—a $50 million write-off and fraud, no less.
Their shares tanked, adding pressure to the broader market.
Turns out the credit sector's got more problems than anyone wanted to admit. Top financiers are basically saying defaults are coming, and they're not going to be pretty.
Between the bankruptcies and the sketchy lending practices, people are starting to wonder if American banking is held together with duct tape and prayers.
7.15am: Footsie like to start on the back foot
The FTSE 100 was called lower ahead of Friday's open after a weaker close on Wall Street overnight as renewed concerns over the banking sector and the government shutdown pressured investor sentiment.
London's blue-chip index is expected to open over a percent lower after ending Thursday slightly higher, with the FTSE nudging up 0.1% to 9,436, or 11 points. Yesterday's session started off flat as investors digested UK GDP data that met forecasts, alongside lingering inflation concerns and mixed corporate updates.
In New York, the Dow Jones shed 0.7%, the S&P 500 fell 0.6% and the Nasdaq ended 0.5% weaker as a key vote, which may have ended the US government shutdown, about to enter its 17th day, failed to reach the required number of votes in the Senate.
The vote was 51-45, short of the 60 votes required, as policymakers remain at an impasse over healthcare subsidies.
Zions Bancorporation led declines among regional US banks, with shares falling about 13% after the company disclosed a $50 million charge-off tied to two commercial loans from its California Bank & Trust division.
Asian markets are mostly weaker this morning as well. Tokyo's Nikkei 225 and Shanghai's SSE Composite are both down 1.4%, while the Hang Seng in Hong Kong has dropped 1.9%. However, Mumbai's BSE Sensex has gained 0.7% while Sydney's ASX 200 is down 0.8%.
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